Political and labour violence will stalk foreign business after Marikana massacre

The Marikana mine workers massacre

The Marikana mine workers massacre in August 2012

On 12 August, Nora Madolo was shot midmorning while walking among the community of the Marikana mine in Rustenburg, South Africa. The killing of the union shop steward came shortly before the tense anniversary of the Marikana mine massacre on 16 August 2012.

Last year, the Marikana mine was the site of a violent strike. The strike escalated when police fired into thousands of protesters, killing 34. The strike then spread to other platinum, gold and iron-ore mines, costing the key mining sector billions of rand in revenue.

Since then, a fragile labour order exists in the mining sector. However, an even more ominous political and reputational risk looms for foreign business in South Africa in the next few years.

Police are investigating a plot to murder Parliamentary Ethics Committee Chairman - Ben Turok and the Registrar of Members’ Interests - Fazela Mohamed. Both are members of the committee investigating former Communications Minister Dina Pule. In the North West, the African National Congress (ANC) is investigating an alleged plot to kill former Premier Thandi Modise. The politics of the ANC has become fused with intimidation and even assassinations, often factional struggles about patronage and wealth.

As the British Economist explained on 20 October 2012, “Jobs in national and local politics provide access to public funds and cash from firms eager to buy political influence. Because the stakes are so high, competition for power is bitter and sometimes bloody, particularly at the local level. In the past five years, over 40 politicians have been killed in KwaZulu-Natal, a province with a history of political violence, and at least five more in Mpumalanga, a province in the north-east of the country. The killing is often about money. Sometimes whistle-blowers are murdered to stop them revealing corruption; sometimes rivals are disposed of.”

Under the ANC of President Jacob Zuma there have been advances in building houses for the poor and increased access to electricity and water. However, power corrupts. And after 19 years, power in a one-party dominant state is also corrupting democracy.

Below the surface, social tensions and factional dissent simmer. Already on 11 November 2012, The Washington Post stated:” In newspaper columns, on radio talk shows, blogs and social media, the ANC is facing a public outcry, accused of corruption, being ineffective, wasteful and out of touch with South Africa's impoverished masses. Even prominent anti-apartheid figures are publicly disparaging the ANC leadership, calling its credibility into question.”

Among the critics are the iconic retired Archbishop Desmond Tutu, a fervent anti-apartheid activist and Nobel Peace Prize winner. Tutu indicated in May 2013 that he would “very sadly not be able to vote for the ANC after the way things have gone.” As reasons, he referred to pervasive state corruption, mismanagement and the intimidation of political opponents.

Political intimidation and assassinations are not exactly the mainstay of democracies. The Economist of 10 August 2013 warned against crony capitalism, citing the example of business people like Cyril Ramaphosa in South Africa becoming too close to the ANC government. However, crony capitalism with links to political intimidation and local assassinations are even more deadly to business reputations.

There are clear political, labour and reputational risks for the 554 major international firms in South Africa, especially if they become too close to the ANC. As ANC factions and opponents compete, these risks are likely to increase during the next few years.

* Dr. Heinrich Matthee is a Europe-based political risk analyst and a Research Associate, Free State University, SA.